The Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, has urged the government to exercise caution in its bid to return to the international capital market following Ghana’s recent debt restructuring.
He warned that excessive reliance on external borrowing, particularly through Eurobonds, is unsustainable and could undermine long-term economic stability.
Delivering his inaugural lecture at the Ghana Academy of Arts and Sciences on the theme “Debt, Investment, and Growth in Ghana: Did We Borrow to Consume?”, Professor Quartey highlighted the country’s fiscal position.
He noted that Ghana’s deficit financing stood at 3.2% of GDP in 2023 and is projected to rise to 5.2% in 2024, stressing the need for prudent debt management.
He called for a shift towards more sustainable financing strategies to mitigate financial risks while fostering economic growth.
However, Ghana recently restructured its debt under an IMF-supported program aimed at reducing financial strain and restoring macroeconomic stability. Moreover, concerns remained about the country’s long-term debt sustainability.
Professor Quartey advised the government to prioritize domestic financing options over external debt, which often comes with high costs and increased financial vulnerability.
“I want to sound this caution: borrow less from the capital market and at reasonable interest rates. These days, you hear we want to go to the capital market. After the restructuring, you hear we are hoping very soon we will finish the restructuring and be able to go to the capital market.
“But why the rush? That is where we went, and we are now facing these problems. And yet, after giving people a haircut, we are eager to return to the same market. I think we should tread cautiously when it comes to borrowing, especially Eurobonds and other capital market funds. They are too expensive and unsustainable,” he said.
Professor Quartey’s remarks reinforce the ongoing debate on Ghana’s debt strategy, as policymakers weigh the balance between securing much-needed financing and ensuring long-term economic resilience.
